Anyone who has driven the Sawgrass Expressway toll road through Broward and Miami-Dade Counties is likely familiar with the road’s two toll plazas, the southern one in Sunrise and another, the Deerfield Toll Plaza, to the north. The northernmost of these two toll areas emerged as the subject of a commercial dispute case recently, with a contractor and a subcontractor litigating which one actually installed a toll gantry and was therefore liable to the state for paying sales and use taxes. The 4th District Court of Appeal reversed a summary judgment in favor of the subcontractor, ruling that relevant factual issues remained in dispute, making summary judgment inappropriate at this point in the case.

The source of the conflict dated back to 2007, when Lambert Brothers, Inc., a contractor, reached an agreement with Community Asphalt Corporation to provide certain services related to the construction of the Deerfield Toll Plaza. Part of those services included constructing two steel gantries at the plaza. Mid-Park, Inc. bid on, and secured, the work for manufacturing and delivering the gantries. The contractor and the subcontractor signed an agreement that, according to Lambert, also included Mid-Park’s installing the gantries and paying all the taxes involved in the job.

A year later, the state Department of Revenue contacted Lambert about an outstanding sales and use tax bill in excess of $77,000. Lambert contacted the Department of Revenue to state that it was not responsible for paying the tax. Mid-Park later did the same. Ultimately, facing an imminent lien or account seizures, Lambert paid the tax and immediately sent Mid-Park a letter demanding reimbursement. When the subcontractor refused, Lambert deducted the $77,000 sum from the amount that it still owed Mid-Park.

Mid-Park sued Lambert for breach of contract, alleging that the contractor improperly withheld money it owed to Mid-Park — namely, the $77,000 amount. Each of the contractor and the subcontractor asked the trial court to award summary judgment in its favor. The issue in the case centered around which party installed the gantries and therefore rightfully owed the tax debt. This was central to resolving the dispute because Florida law requires contractors that install materials in public work projects to pay sales and use taxes. The trial judge sided with Mid-Park, ruling that the subcontractor did not perform the installation and therefore did not create the necessary taxable event to oblige it to pay the tax.

Lambert appealed, and the appeals court ruled in its favor. The court was not persuaded by Mid-Park’s argument that the issue regarding who performed the installation had already been litigated previously, in a hearing before the Department of Revenue. The hearing before the Department of Revenue was only an informal one, and that hearing did not resolve based upon admissible evidence the issue of who installed the toll gantries, which was the central dispute in the current breach of contract case. Such an informal hearing conducted under those circumstances did not qualify as having already litigated the issue for the purpose of applying the legal doctrine of collateral estoppel.

Additionally, the appeals court determined that a relevant dispute of fact remained in the case, which would make summary judgment improper. The Lambert-Mid-Park contract, with terms that expressly stated that Mid-Park bore the responsibility of installing the gantries, was by itself enough to create a viable dispute of fact that was relevant to the resolution of the case. With that dispute unresolved, the subcontractor was not entitled to summary judgment.

Commercial relationships like those between a contractor and a subcontractor involve many essential parts. Whether it is ensuring that your contract document reflects the true terms of your agreement, or resolving a breach of contract dispute, knowledgeable business and commercial litigation counsel can provide vital services. The experienced Florida commercial litigation attorneys at Stok Folk + Kon have the resources and the resolve to help you with your business law and commercial litigation needs.

Contact us online or by calling (305) 935-4440 to schedule your consultation.